NOTE: I posted a similar thread a few days ago in
Development & Technical Discussion that got moved to the mining section. After that, the thread was thrashed by the admin of the mining board. I would like to keep this one here if that is all right, so @mods please don't move it to the mining board.
We know that 4 out of the 5 biggest mining pools are located in China, and they control 60-65% of the world’s hashrate. My focus will not be on the pools because hashrate can be easily directed to other non-Chinese pools if needed. What could be worrying is the centralisation in the production of mining equipment and mining farms located inside China’s borders.
Why is China leading the mining race?The biggest reason is cheap electricity. Hydroelectric power, wind farms, and energy produced from burning coal. The electricity produced by these facilities is more than the supply demands. A lot of it would have been wasted if the produced energy wasn’t directed towards mining bitcoin.
According to
GlobalPetrolPrices.com, the price of electricity in June 2020 in kWh for households amounts to $0.085 in China. In the US, the same amount of electricity costs $0.149. Electricity is the most expensive in Germany, where 1 kWh costs $0.385.
![](https://ip.bitcointalk.org/?u=https%3A%2F%2Ftalkimg.com%2Fimages%2F2023%2F11%2F12%2FzUY8m.png&t=665&c=VFFEwdq4lWAljA)
If we switch to electricity prices for businesses, we see a very different picture. The cost in China is $0.104/kWh and it the US it’s $0.111/kWh. The difference isn’t that big. Surprisingly, Aruba and Bahamas are at the bottom of this list with $0.274 and $0.305 per kWh.
Low Prices = Centralisation of Mining Power?Chinese mining firms once dominated the market by over 70%, but that rate is slowly but steadily dropping to 65% and 60%. The problem could be that still too much of the hashrate is centralised in a region under a regime that could attempt to control, oppose, or destroy it. China doesn’t keep it a secret that they want to create their own national digital currency. From the regime's point of view, the big focus on bitcoin could affect their own digital asset they are planning to release sooner or later.
They don’t have to ban bitcoin mining, but they could hit miners where it hurts the most: The source and access to power. Increase electricity costs, make it less profitable, and have them abandon ship and take their equipment elsewhere.
The Northern American continent is now taking a decent chunk in this industry with new centres opening in the USA and Canada.
The US helps in decentralising bitcoin miningSuppose we are to trust the stats provided by GlobalPetrolPrices.com from above. In that case, the USA's institutional price for electricity is not much more expensive than in China.
In October 2020, the US crypto mining company
Marathon announced that it partnered with a local power provider to supply them with electricity for their mining operations. The location for this new facility is in Hardin, Montana.
According to media reports, the price of this electricity is $0.028 per kWh. This is well below the figures that GlobalPetrolPrices.com reported. The initial report claimed that the company plans to install 11.500 Antminer S19 Pro with some already in operation.
In December 2020,
a new announcement was made. It was mentioned that Marathon had purchased an additional number of 10.000 Antminer S-19 Pro miners. These will be delivered throughout 2021, and once all are installed, Marathon will have over 33.500 miners (not sure where the others came from). These numbers were later boosted with another
purchase of 70.000 Antminer S-19 miners taking the overall count to well over 100.000 ASIC miners once all are deployed.
There seems to be ever-growing interest by some Chinese miners to relocate their operations to the States. The US offers greater political stability and freedom, not just competitive prices. This is good for the entire industry and helps in decentralising bitcoin mining. Marathon is not the only facility, and currently, there are around 15 mining companies in USA and Canada.
Another report discusses how the Chinese government has started suspending bank accounts of Chinese miners who have been found exchanging bitcoin for yuan over OTC platforms. Unable to convert their coins into fiat and pay for electricity and other expenses, some firms have shut down, while others have fled to Russia or Kazakhstan.
What is your take on all of this? Do you believe that countries like USA, Canada, Russia, etc. will become the powerhouses of mining operations in the future?
Do you see China as a treat to decentralization?
Sources of information and further reading material:
1.
https://www.buybitcoinworldwide.com/mining/china/2.
https://www.coindesk.com/bitcoin-miner-marathon-profitability-joint-venture-us-power-provider3.
https://www.coindesk.com/chinese-miners-struggle-to-pay-for-electricity